Key Idea #1: Solve A Problem
Richard Fluker thought that if he couldn't find bait at his local bait shop, there must be other fishermen who couldn't find it either.Also, he was a high school science teacher who needed insects to feed his frogs! He had a problem on two fronts which he solved when he launched Fluker Farms in 1958.

Topic for discussion: Where do ideas for businesses come from?

Answer: Most small business owners will tell you they just noticed a problem that they thought they could solve. In the case of Richard Fluker, his problem was the local bait shop never had enough live crickets. To get ideas for a business ask yourself: what do people need or want and would they be willing to pay for it? Or, what do I need or want that others might want too? If you hit on a great idea that others are willing to pay for, then your business will grow and be profitable. If your idea has limited appeal, you may struggle for years trying to find enough customers to make your business viable.

This is why big companies spend so much money on research before they launch a product. They want to minimize the risk of bringing a new product to the marketplace that might not attract enough customers to generate profits. Small business owners are famous for spending time and money on an idea that is never embraced by the marketplace. You have to be determined and not give up too quickly, but, at the same time realize that just because you think it's a good idea doesn't mean it can be successful commercially.

Topic for discussion: How does a small business do market research?

Answer: Generally, informally. Small businesses usually don’t have the resources to engage research corporations to conduct focus groups or do marketing firms to do surveys. But that doesn't mean they can't do market research themselves. If you have an idea for a new product, run that idea by potential customers. Ask them if they would buy it and, equally as important, what they would pay for it. What you learn is called “anecdotal evidence”. It's not scientific, you won't have a statistically expressed margin of error, but it's still very valuable. And if you preface your inquiries with the fact that you are thinking about investing your resources in this idea, you can reasonably expect people to be conservatively realistic in their responses.

Few of us would want to be responsible for someone else losing money! If your customers are already buying crickets from you and enough of them tell you that they would buy mealworms, too, if you sold them, that’s pretty reliable market research.

Market research is not just for big companies. If you have an idea for a new business or a new product or service for your existing business, do your homework before investing your resources in your idea.

You think about it: Do you have an idea now that should be tested? Who would be the customer of the new product or service? What are you waiting for?

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Key Idea #2: Step Aside
Richard lost his passion for the business and rather than try to keep plodding along while holding the reins of power, he made the decision to completely step aside. David was only 19 years old but his energy and enthusiasm with guidance from his Dad proved to be a winning formula. David brought a new and broader vision of expansion to the company.

Topic for discussion: What does a business owner do to ensure that his business is carried on?

Answer: Legacy planning is one of the biggest challenges a business faces. In another espidoe of the show about Medallion Financial, we saw them handle three critical success factors extraordinarily well.

Don't Just Hand over the Keys. Andy's grandfather worked with Andy's father and Andy's father worked with Andy. Each successor was carefully groomed to take over the reins. This is critical to ensuring a smooth transition.

Respect the Heir. No one will make the same decisions that you would have made and choose the same path that you would have chosen. Don't hamstring the legacy by expecting to clone yourself.

Keep Disagreements Private. The keys to the Executive Washroom are best passed over gradually and there will be disagreements during the transitional period. Neither employees nor customers should be aware of even the remotest hint of conflict. Conflict is natural and healthy as the legacy is implemented but is best kept private to ensure that its significance is not overstated.

You think about it: If your exit strategy includes an established legacy, do you have a legacy plan and a timeline for its execution?

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Key Idea #3: Target Your Marketing
Richard Fluker focused on the bait shops and did business with zoos and research labs around the country. The customer base of Fluker Farm includes the local bait shop and the Smithsonian Institute - -this is quite a mix. When his son David joined the business, he determined that pet shops would be a great market for live crickets because pet shops need live crickets to feed to some of the pets they are selling.

Topic for discussion: How did David break into the pet shop business?

Answer: He used direct mail. He bought a list of all the pet shops in America, and then mailed them a postcard. After two years of direct mail, he bought another list, one that included telephone numbers, and started calling prospective customers. Many placed their first order right on the phone. Established relationships with pet shop owners led to the iguana business, a profitable segment for the Flukers. David continues to nurture the relationship with the pet shop owners by providing them a newsletter, a web site full of information, and, by having well-trained customer service people to take in-bound telephone calls.

To do what David did requires technology. You have to have computing systems, the patience to build a database and it. You can use a local company who specializes in direct mail to print your materials and even do the mailing, but, when you start getting responses you have to be able to take the in-bound telephone calls, keep up with requests and fulfill the customer orders.

You think about it: David called them “growth decisions," recognizing opportunities to sell your products to new customers and to sell new products to existing customers. What growth decisions can you make in your business?

Key Idea #4: Develop A New Product For An Old Customer
Raising and selling meal worms in addition to crickets to bait shops then raising and selling iguanas to pet shops were fantastic ideas. Customers who were used to Fluker Farm's excellent service and product guarantees had zero risk when they were offered new products.

Topic for Discussion: How does a business determine the new product offerings that will appeal to their customer base?

Answer: Unlike a lot of the challenges that face business owners, this is a question that can actually be addressed mathematically! It is unlikely that any two businesses in the world have exactly the same customer listing. Yours is unique. Every one of your customers buys from other vendors as well. Find out what they buy, and from whom. Look for natural synergies within your own product mix offering. You may find additional inventory items or services, which you are already positioned to add to your goods or services available for sale, that your customers would readily purchase from you.

Perhaps there is a vendor relationship that you could establish which would permit you to add another line of goods that your customers are currently buying from a competitor because it is not available from you. In the service industries, perhaps you could establish a strategic alliance with another service provider and bring a unique service to your existing customer base. Most businesses buy paper clips but if you sell industrial machinery, we're not suggesting you get into the office supplies business. What we are suggesting is that the existing customer relationships you have are one of your most valuable assets.

Meal worms and iguanas were a logical extension to Fluker's core business and they were perfectly positioned to launch new products with minimum investment and minimum risk. The underlying merit of product innovation for existing customers is the same, it's less challenging, i.e., it requires less effort, to develop a new product, than to develop a new customer relationship.

Topic for discussion: What does Fluker Farms do to get additional orders from existing customers?

You heard David say that Fluker Farms will take a loss, even on an initial order, if that’s what it takes to satisfy the customer. He figures a satisfied customer will be a repeat customer and Fluker Farms’ profits lie in repeat customers.

The reason so many of the pet shop owners do business with Fluker Farms is because of David's father's philosophy: "a satisfied customer gives you future business." The company has always been dedicated to customer service so when the meal worms and iguanas were offered, the customers were happy to give Fluker Farms more business.

You think about it: What do you do in your business to ensure that your customers are satisfied? When was the last time you personally asked a customer to tell you what they think of your service or product? Have you ever asked customers for referrals? If not, why? What could you do to learn more about what your customers really think about what they buy from you and why?

What do your existing customers buy from other vendors that they would buy from you if you offered it? If you don't know, ask them! What would it cost you to expand your offerings and what profitability can you reasonably expect?

Key Idea #5: Brace Yourself For Emotional Stress
Working with family can be good and bad. When Mr. Fluker decided to retire, he turned over the reins and ownership of Fluker Farms to his children, David, Howard and Diane. It was up to them to figure out how to make it work.

Topic for discussion: How have the siblings structured their working relationship to avoid conflict?

Answer: Howard runs the iguana farm located in El Salvador while David runs the cricket and meal worm operation in Louisiana. This gives each of them an opportunity to achieve the big goals and not be worried about the way the other brother is handling day-to-day issues. Clearly defining roles and responsibilities among family members within the business limits the occurrences of conflict. It's also important to distinguish the owner and employee hats that each family member wears.

As owners, each family member, siblings in the case of the Flukers, has the right to participate in important decisions that affect the business on a global level. In this sense, the siblings would be acting very similarly to an outside board of directors. As employees, however, members of management with different roles in the company, each must be given the same autonomy in running day-to-day operations that the owners would expect to give to an unrelated manager.

You think about it: If you work in a family-owned business, have you clearly defined the roles and responsibilities of each family member? Have you attended seminars dealing with family business issues? Have you employed a family business consultant?

Key Idea #6: Hire College Students

Topic for discussion: What are the ups and downs of hiring college students?

Answer: David says the best thing about having college students around is that they are energetic and creative. The team of students he has now doing outbound telemarketing came up with many marketing ideas and they are fun to have around. They are smart and, of course, he only hires those who have strong communication skills and are interested in sales. This had been a weak link for Fluker Farms because most of the employees are basically agricultural workers.

The negative to having college students as partners is the turn-over. When they graduate or have a semester in which they can't find time to work, David has to find a replacement. If you have jobs which can be taught quickly and need people to work odd hours, college students are an excellent option.

Mir Fox Rodriguez, a CPA firm based in Houston, operates in an industry where turnover is high and the competition for entry level employees is keen. They started their college student internship program in order to solve a business problem: the firm was losing out to the big firms in attracting the best graduates to MFR. The owners thought that if young people could work at MFR BEFORE they graduated, they could learn the firm's corporate culture and meet its people; the firm would be better positioned to compete for the employee on a permanent basis.

Topic for discussion: How did MFR get the internship program up and running?

Answer: Carolyne Fox, one of the founding partners, prepared a brochure describing the program in great detail and emphasizing its flexibility and the value of the internship experience. She contacted the Dean of the College of Business of all the major universities in Houston, touting the MFR internship program from the point of view of the student. From the Houston Chapter of the Texas Society of CPAs, Carolyne purchased a mailing list of associate (student) members. The firm held open houses for the students to tell them about MFR in general and the internship program specifically. These events were advertised by mail, e-mail, and with flyers posted on the bulletin boards on campus. Application materials were available at the open houses and all present were encouraged to apply.

There are two reasons why a company might benefit from an internship program. First, is the reason MFR had in establishing theirs, to ensure a pipeline of new, talented recruits to the firm's professional staff. But there's another reason an internship program, without the likelihood of permanent employment, might make sense for a business. Who are your most valued, productive employees? How do they spend their time? Would they benefit, i.e., would the company benefit, if these employees had some part-time administrative assistance?

College students are bright, energetic, and can be of enormous value to a business. Because they work part-time, the business does not bear the cost of employee benefits, making interns a cost effective alternative as well. Talk to your employees, particularly the ones you sense are overworked. Ask them if they perceive any benefit to the idea of starting an internship program. If you decided to proceed, contact the career center at your local university. But don't stop there. Find out who the appropriate department head is and call him or her directly. Send a job description, hourly wage, and a clear description of how flexible you can be on the number and time of hours worked. Ask the department head to circulate your need to the entire faculty. Students will go to the career center and contact you, but a student recommended by a faculty member may very well be the best candidate.

You think about it: Is there a place for college students in your company?

Key Idea #7: Be The Person People Want To Work For
David has grown into an excellent leader because he is smart, driven and at the same time respectful of all people. You even heard one of the employees say that David is a better boss than was his Dad!

Pam McNair, the founder of Gadabout Salon and Spa isadmired by her employees because she is like a minister, social worker and therapist to them. Pam has developed her own leadership skills then continuously invests in personal development for everyone on her team.

Topic for discussion: Why bother to work on self-improvement and then try to help others improve?

Answer: Because people stay where they respect the leadership and where they feel they are being given a chance to learn and grow themselves.

Tom Gegax who grew a company from zero to 2,000 employees told us the more he worked on himself the bigger and better the company grew.

You think about it: What aspects of your personality and leadership skills need to be improved?

Key Idea #8: Keep Raising The Bar
No matter how hard you try, you can't stand still.

Topic for discussion: What keeps David motivated to keep on improving the business?

Answer: He said he feels responsible for every employee. He feels that people depend upon his leadership and we believe his generous spirit towards others and focus on others rather than himself is a key to his success.

Most small business owners reach a net worth which gives them the freedom to quit working. When this level is achieved, their efforts are for the benefit of employees and customers and this creates an on-going supply of positive energy.

If you keep raising the bar for the benefit of others, you will never want to retire because you wouldn't want to live without the satisfaction you derive from living such a useful life.

You think about it: What needs to be happening in your company that is not now happening?

We invite your comments, suggestions and questions.

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